This research is concerned with the psychological development of young children from families in which one parent has a history of bipolar affective illness and children from families in which there is no diagnosed parental psychopathology. Children are studied longitudinally beginning at 12 months of age. Observations in the home and mothers' reports provide data on day-to-day functioning. In a series of laboratory sessions, assessments are made of children's affective and interpersonal functioning with peers, mothers, and unfamiliar adults. Children from bipolar families were particularly likely to have behavior problems, disturbances in attachment patterns, deficits in social-cognitive functioning, and difficulties in interaction with peers. Childrearing practices were also different in normal and bipolar families.